Pensions triple lock needs to be 'rectified' due to coronavirus, top tory says
The triple lock guarantees the state pension will rise by inflation, 2.5% or average earnings - whichever is highest
The triple lock on pensions needs to be "rectified" due to coronavirus, a top Tory said today.
Therese Coffey appeared to raise a question over the Tory manifesto pledge after a Covid-19 loophole threatened to hit the government with a massive bill.
The triple lock guarantees the state pension will rise by inflation, 2.5% or average earnings - whichever is highest.
But average earnings fell the fastest on record in April, partly due to millions of people being put on 80% or lower furlough pay.
That suggests that after the furlough scheme ends, there might be a huge but "artificial" rise in pay in 2021, when compared to the same time this year.
Because pensions are based on average earnings between May and July, that could technically lead to a huge but unaffordable rise in pensions in April 2022.
It is understood Chancellor Rishi Sunak is examining how to solve the issue.
Work and Pensions Secretary Therese Coffey insisted the Tories stood by the manifesto pledge.
But she added: I think it is fair to say we have some situations ahead of us but it is something I'm in discussion with. This is not about abandoning the triple lock in any way. But there are some consequences if average earnings fall during this year that we need to rectify in order to make sure that aspects of the law that is already in place cannot be set aside.
The PM’s Press Secretary previously insisted there are “no plans to abolish” the triple lock but refused to say if it could be suspended temporarily.
Questioned on June 17, the spokesman also did not rule out the possibility of it being scrapped in future.
He said: On the triple lock, these are unique and challenging economic circumstances and we cannot hide from that.
Decisions on tax and pension policy are set out at Budget by the Chancellor, but there are no plans to abolish the triple lock and we will always stand by pensioners, he said.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.